Gold (XAUUSD) & Silver Price Forecast: Gold Eyes $4,600 – Breakout or Trap?

Gold and Silver Fundamental Outlook

Gold and Silver are back on the radar in global investment portfolios as the world grapple with increasing geopolitical tensions and the uncertainty that comes with them changing investor behaviour.

Central banks reportedly added a staggering 1,000 metric tons of gold to their reserves last year, according to the World Gold Council – that’s a continuation of what’s been one of the strongest buying sprees in decades.

In particular emerging market institutions have been going all out on diversifying their portfolios in light of rising sovereign risk and persistent inflation worries – they just can’t let go of the economic uncertainty that’s haunting them

Exchange traded product holdings have stabilised after those earlier outflows, while the futures market is showing that institutions have indeed come back in – to buy, that is. Strategists point out the bigger picture that the massive budget deficits and escalating defense spending across the major economies is only adding to gold’s appeal as a safe bet for central banks and a way to hedge against economic uncertainty on their balance sheets.

Silver’s situation is a bit more complex – it’s tied to both monetary and industrial demand. A massive 55% of the global demand for silver is linked to manufacturing of solar panels and electronics, for example – and The Silver Institute says we’re looking at yet another supply shortfall this year – that’s the fourth one in a row.

Gold (XAU/USD) Reclaims $4,536 as Descending Trendline Faces Pressure

Gold is stuck around $4,536 on the 2 hour chart trying to just hold it together after tumbling from $4,856. It’s currently bumping up against a pretty clear descending trendline and still clinging onto support at $4,474.

If gold can somehow punch above this resistance line it might just gain some room to move towards $4,601, then perhaps on up to $4,725 near the 200 day moving average.

The 50 day MA is still well below the 200 day MA, that’s not looking good for the bulls – shows there’s still some broader selling pressure around, but the rsi is heading up towards the mid-60s so that does suggest golds momentum is starting to pick up again. But if gold cant hold $4,474 then it’s straight back to $4,326 and $4,223.

Silver (XAG/USD) Tests $71.00 as Triangle Resistance Tightens

Silver is hovering around at $71.07 , and its trying to push through descending trendline resistance while still holding above the pivot zone at $70.35. The price action shows it’s been making higher lows from $66.74 which is a strong indication that silver is in the process of accumulating within a tightening range.

If silver can then break clear of $72.00 that could really open up $74.56, alternatively if it rejects that resistance then it may be back slapping back down to $68.00. The 50 day MA is actually flattening out below the 200 day MA which suggests that it’s just going through the motions, trying to recover within a broader corrective phase.

The rsi is slowly climbing back above 55 which is definitely a nice sign thats momentum is starting to pick up in the short term at least, but its still not yet overbought.